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HMRC internal manual

Capital Gains Manual

HM Revenue & Customs
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Value shifting: Corporation Tax anti-avoidance rule for disposals of shares or securities from 19 July 2011: outline and case handling


FA11/S44 and Schedule 9 of Finance Act 2011 introduced a targeted anti-avoidance rule for Corporation Tax that applies to disposals of shares or securities on or after 19 July 2011 (the day the Act was passed). This is to be found in TCGA92/S31 and means that the general value shifting rule in TCGA92/S30 no longer applies to disposals of shares or securities by companies.

For disposals before 19 July 2011 the operation of TCGA92/S30 in a group context was subject to additional rules in TCGA92/S31 - TCGA92/S34. Detailed guidance can be found at CG46800+.

The new TCGA92/S31 addresses arrangements that are entered into for the purpose of obtaining a tax advantage that have the effect of reducing the value of shares or securities. Where the rule applies the consideration on a disposal of shares or securities may be increased where that is just and reasonable. Any adjustment will be of an amount that counters the tax advantage obtained.

General guidance on TCGA92/S31 follows after a short summary of the history of the provision. Finally there are examples of situations where the rule may or may not be expected to apply.

Anti-Avoidance Group (Investigation) is responsible for deciding whether an adjustment under TCGA92/S31 should be sought in any particular case. You should report any such case as soon as it is apparent that the legislation may apply and before you put forward any argument on the point.

This chapter generally discusses the operation of the rule in the context of a “vendor group” disposing of a 100% holding in a “target company” and uses the term “shares”. However the guidance can apply to any disposal of shares or securities by a company.